The “Schannep Recession Indicator” (SRI), developed by Jack Schannep in 2000, aims to identify U.S. recessions by analyzing the unemployment rate. The SRI signals a recession when the three-month moving average of the unemployment rate rises by at least 0.4 percentage points from its previous cyclical low.
The latest SRI signal was triggered on June 7 with the May unemployment rate at 4.0%, suggesting a recession might be underway. The SRI’s advantage is its ability to predict recessions more promptly than the National Bureau of Economic Research (NBER), which often takes months or even over a year to confirm a recession’s start. Despite its reliability, caution is advised, as predicting recessions remains inherently challenging, and other models have sometimes failed to provide accurate forecasts.
